President Donald Trump joined mounting criticism of Harvard on Tuesday, saying the richest university in the country would pay back $8.6 million in relief money from a coronavirus stimulus package that the president himself signed last month.
“Harvard’s going to pay back the money,” Trump said at his evening news briefing, adding, “They have one of the largest endowments anywhere in the country, maybe in the world, I guess, and they’re going to pay back that money.”
But the president appeared to conflate the source of the funds allocated to Harvard with a set of federal loans meant for small businesses, and the university said it would keep the money and distribute it entirely to students in need. The Education Department said the formula for distributing the aid package to universities was set by Congress and cannot be altered.
The $2 trillion relief package signed by Trump on March 27 included $14 billion for higher education. Colleges and universities have taken a significant hit from shutting down their campuses, refunding room and board to students, and losing other revenue streams, including spring athletic events.
The Education Department announced that thousands of universities and colleges, both public and private, would receive assistance. The recipients ranged from the Ivy League to beauty schools, and the money was divided up based on a formula taking into account the size and income level of the student body.
About half of the relief money received by universities is supposed to be given to students as emergency cash grants, and the other half is meant to make up for revenue losses and costs related to the pandemic.
The amount Harvard received was in line with comparable universities. Among Ivy League schools, Cornell and Columbia received more, at roughly $12.8 million each. Stanford received $7.3 million, and Yale received $6.8 million. Some less prestigious universities received similar grants: $9.2 million for Arkansas State University and $9 million for Central Connecticut State University, for example.
The biggest allocation went to Arizona State University, which got $63.5 million.
But Harvard’s allocation generated withering criticism on social media and among Republican politicians this week because of its large endowment — $40.9 billion as of June. Critics said it was unseemly for such a wealthy university to be getting taxpayer money when 22 million people had recently joined the unemployment rolls.
Even some alumni were displeased. Danielle Leonard, a lawyer in San Francisco who graduated from Harvard, said the university had many options other than taking public money.
“Just because the law was written to make the money available does not mean it was moral to take it,” she said, adding that the school has many other ways, including through loans, to support students and pay employees and staff members. Harvard “does not need a grant of public funds to do that,” she added.
The criticism came at the same time that several large national chains received money from a different part of the stimulus package meant to provide loans to small businesses. They included the restaurant chain Shake Shack, which said this week it would return $10 million it had received from the program.
When a reporter asked Trump and Treasury Secretary Steven Mnuchin on Tuesday about the loans, Trump replied with his statements about Harvard returning the federal relief money.
The university said that Trump appeared to misunderstand the source of the funds it was slated to receive.
“Harvard did not apply for, nor has it received any funds through the U.S. Small Business Administration’s Paycheck Protection Program for small businesses,” said Jason Newton, a Harvard spokesman. “Reports saying otherwise are inaccurate. President Trump is right that it would not have been appropriate for our institution to receive funds that were designated for struggling small businesses.”
The Education Department said late Tuesday that the education secretary, Betsy DeVos, shared the president’s concern about money going to schools like Harvard. “Sending millions to schools with significant endowments is a poor use of taxpayer money,” said Angela Morabito, a department spokeswoman.
She said DeVos had sent a letter to college and university presidents, asking them to determine if their institutions actually need the money. If not, she asked them to send their funds to other schools in need in their state or region. “We hope that the presidents of these schools will take the secretary’s advice,” Morabito said.
The formula for calculating funds to universities was based to a large degree on the overall student enrollment and the proportion of low-income students, as measured by those receiving federal financial aid through Pell Grants. Of the 6,600 undergraduates at Harvard, 16% are Pell Grant recipients, the university said, and in the 2018-19 academic year, Harvard provided $200 million in scholarships for its undergraduates.
“It was purely mechanical,” said Terry Hartle, a senior vice president at the American Council on Education, a trade group. “Harvard got that money because that’s the way the formula allocated it.”
Arizona State, for instance, received the largest allocation because it has 83,000 students, including 40,000 considered low income, Hartle said. He estimated that beauty colleges got more than $166 million in combined funding.
Hartle acknowledged that the formula was open to criticism. “Formulas that are created quickly usually have anomalies that might have caught attention if there had been more opportunity to think it through,” he said.
After the outpouring of criticism, Harvard said Monday it would devote all of the stimulus money it was receiving to students “facing urgent financial needs” because of the pandemic, and would not use any of it for its own operations.
“This financial assistance will be on top of the support the university has already provided to students — including assistance with travel, providing direct aid for living expenses to those with need, and supporting students’ transition to online education,” Newton, the Harvard spokesman, said Tuesday.
Harvard’s president, Lawrence S. Bacow, said recently that because of declines in the markets, the university’s endowment, “while large, is not as large as it was previously.”
Bacow, who tested positive for the coronavirus along with his wife and has since recovered, did not say how much money Harvard had lost during the pandemic. But he said that like other academic institutions, it was already seeing significant financial losses and expects more if students are unable to return in the fall.
“Although we entered this crisis in a position of relative financial strength, our resources are already stretched,” Bacow said. “If we are to preserve our core mission of teaching and scholarship, we face difficult, even painful, decisions in the days ahead.”